Question to the Department for Business, Energy and Industrial Strategy:

To ask Her Majesty's Government, further to the Written Answer by Lord Callanan on 16 September (HL7963), whether the model being used by the International Standards Board to set international accounting standards produces numbers which enable the provisions of the kind set out in section 841(2)(b) of the Companies Act 2006 which are designed to ensure compliance with section 830 of that Act; and if not, (1) what model the Board is using, and (2) when the Board decided to adopt that model.

UK legislation set out in Part 15 of the Companies Act 2006 (CA06), requires certain companies to use EU-adopted international accounting standards, to produce their accounts. After the end of the transition period, UK companies will be required to use UK-adopted international accounting standards. Part 15 gives an overriding requirement that the accounts must give a true and fair view of the assets, liabilities, financial position and profit or loss of the company.

International accounting standards require companies to recognise provisions (liabilities) where specific conditions are met. When a company uses international accounting standards accounts to make a distribution, Section 841(2)(b) of CA06 requires those provisions to be treated as realised losses (except revaluation provisions).